One cent jewelry - how do they do it?

I'm not a seller on ebay but I plan to eventually use it as a sales funnel to other online selling venues.

I was checking out the jewelry scene and I saw this:

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This person is starting his bids at .01. It seems that on average, he/she sells them at an ending price of anywhere between 1.50 and as high as about $14

This just shows me how competitive ebay really is - I've read many of the posts on here stating that fact but this was such an 'in the face' example for me.

I suppose because of the huge quantity of stock he moves he is profitable - taking a hit now and then for some sales that never go much above a penny.

Questions:1) Those of you into selling jewelry, are you selling on Ebay or mostly other sites? 2) If on Ebay, do you start your bids super low in hopes of a bidding war?3) Do you have stock or are you dropshipping?4) On average, how much do you make a month in the jewelry arena (whether online or offline):

This is just a case where you have to look more closely at what's going on, to understand it. A search of 9jewelry's Link hidden: Login to view demonstrates that they lose money on pretty much every single order -- as cheaply as fashion jewelry can be sourced, it is impossible that they are ahead on volume (if you sort the listings from the search above by price, you'll note that of the last 200 sales fewer than 10% closed at over $5 -- take away eBay and PayPal fees, plus the cost of shipping and handling, and you're approaching if not at $5 right there without ever taking into consideration what the inventory costs.) So obviously, they are making their money on the back end of the transaction, and are simply using eBay as a cost-effective way to get customers.

This seller's listings are very instructive to prospective eBay sellers -- as I've said in many previous threads, getting hung up on items because you can't figure out how to make 100% profit on every sale is a shortcut to never amounting to much in the market.

The negative feedback items do tend to suggest that he's either dropshipping, our outsourcing fulfillment -- hard to believe that anyone vested in getting and keeping customers would send the wrong item so many times, send damaged items etc. Good eye -- I had not even noticed that.

Regarding your other point, I'm not sure 9jewelry is cheapening the product -- it's being sold for whatever people will pay for it. That is what I've always done with my own gemstone sales, and something you see very commonly in that niche on eBay. Penny auctions, dollar auctions etc. on items worth substanially more. If you look around, especially in the gemstones subcategory, you'll see it's pretty common. In this seller's case he's just being more aggressive with pricing in order to build the customer base to which he is presumably upselling.

Hong Kong based member, free shipping, I doubt this is a drop shipping operation, but who knows.

Looking at the feedback against Their DSR, I would suggest that they aren't really worried about that level of negs, as their DSR is very high, so their trading capacity within eBay isn't under any threat at all.

Looking at the negs, not a single response to any of them either. Their listings suggest that they are a very caring supplier, very open to communication to ensure complete satisfaction. However, the arrogance that they seem to be treating the unhappy customers who are leaving negs seems to defy all of that, but looking at the numbers, that's not slowing down their sales whatsoever.

How are they doing it for the price?
Well unless it's a sales funnel where they are effectively converting customers into profits on other items, I have no idea.

In regards to the prices, as Frank has said. Realistically, the true value in any product is the best price that the market will sustain at any given time.